Siemens Ups its Blockchain Ante with New Investment in LO3 Energy

Siemens sent a clear signal that it sees promise in LO3 Energy’s blockchain distributed energy ledger with an increase in its stake in the emerging technology. The global technology giant recently closed out LO3 Energy’s Series A venture capital funding round.

Lawrence Orsini, founder and CEO, LO3 Energy

“Siemens‘ investment in LO3 represents our acknowledgement of the future potential of blockchain technology as an enabler of local energy market places,” says Ralf Christian, CEO of Siemens Energy Management. “Siemens will further support LO3 with its experience in grid management, data analytics and complementary technology portfolio facilitating the integration of blockchain into state-of-the-art power grids.”

LO3’s blockchain software, which it calls Exergy, is a “peer-to-peer” transaction ledger that enables the movement of energy data, such as contract information and transaction records, among participants at the consumer level. The technology also serves as a distributed energy trading and transaction management platform.

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Blockchains could enable a new, fast-growing category of solar and renewable energy prosumers (producer-consumers), traditional energy consumers, utilities and others to buy and sell low- or zero-emissions energy directly from each other according to Siemens.

With Siemens’ increased stake in LO3 Energy (amount undisclosed), the two companies have been working closely to enhance each other’s distributed energy and microgrid software offerings. Cross-pollination of LO3’s blockchain ledger and Siemens’ microgrid management system, as part of LO3’s flagship Brooklyn Microgrid pilot project, figured prominently in the partnership.

Transactive grid blockchains

Siemens and LO3 began working on the project in late 2015. The Brooklyn Microgrid connects rooftop solar energy prosumers and traditional utility consumers in the Boerum Hill, Park Slope and Gowanus sections of Brooklyn, enabling them to buy and sell local, emissions-free electricity directly from one another.

“In Brooklyn, we combined our microgrid management system to the blockchain-enabled marketplace. Concretely, the system is doing reporting and data analytics, and forecasting generation, load and price and is planned to be enhanced to provide islanding capability in the coming phase,” Constantin Ginet, the head of microgrids for Siemens Digital Grid Business Unit told Microgrid Knowledge.

More than 60 community members are now participating in the Brooklyn Microgrid. While the Brooklyn project continues to grow, “insights from the proliferation of the prosumers and consumers provides Siemens the rationale for building resilient grid systems based on local marketplaces,” Ginet explained.

A distributed energy blockchain collaboration

A symbiotic relationship

The two companies took their alliance a step further late last year, with Siemens’ newly minted venture capital group, Next47, investing an undisclosed amount in LO3. Through Next47, Siemens expects to invest more than $1.1 billion in innovative, decentralized power and energy startups globally over five years.

LO3 Energy is also benefiting from Siemens’ rapidly increasing experience developing microgrids around the world, including a 2014 project in the southern German village of Wildpoldsried.

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Siemens considers its investment and collaboration with LO3 Energy as a prospective keystone in the transformation to decentralized, digital and decarbonized electricity generation. The company sees the new distribution and transmission technology taking root and emerging rapidly in both industrially developed and developing nations alike.

“Siemens and LO3 Energy intend to implement additional blockchain-based microgrid and smart city projects to test out various other business models and gain insights about the replicability of solutions on other regions of the world. We work in particular on pilots in Germany and Australia including multiple marketplaces and different market structures,” sadi Ginet.

Siemens latest investment in LO3 underscores the importance of microgrids to the new blockchain technology.

“Siemens commitment to transactive energy on the blockchain is a vote of confidence for our approach to developing microgrid communities and grid-edge services across the globe, “said Lawrence Orsini, CEO of LO3 Energy.

The sentiment is underscored by Ralf Christian, CEO of Siemens’ energy management division. “We’re convinced that our microgrid control and automation solutions, in combination with the blockchain technology of our partner LO3 Energy, will provide additional value for our customers whether on the utilities side or on the prosumer side.”

A vote of confidence

According to Siemens, LO3’s transactive grid technology paired with Siemens microgrid control solutions will simplify the temporary standalone operation of microgrids – for example, following a natural disaster – and optimize the use of existing resources within the grid infrastructure.

LO3’s Exergy platform uses “cryptographic technology to save data in a way that is tamper-proof and enables the automated execution of contracts in a scalable manner,” according to LO3 Energy spokesperson Melanie Adamson. “Clean energy is bought and sold autonomously from neighbor to neighbor, but also prioritized to critical facilities during natural disasters and outages.”

Blockchain energy hits the world stage

Siemens isn’t the only major energy industry player to take a fancy to LO3 Energy and its blockchain distributed energy technology. U.K. power utility and energy services provider Centrica invested an undisclosed amount in LO3 Energy late this past October. Centrica is also collaborating with LO3 on two new projects, one with its subsidiary Direct Energy in the US, and another being explored in the UK.

Staging an international launch event from Paris last December, LO3 Energy and European electricity exchange EPEX Spot announced a plan to develop blockchain energy trading and transaction systems. They intend to link microgrids and local energy prosumers with the European wholesale power market.

As per the plan, LO3’s technology will initially be used in community microgrids to connect local, peer-to-peer markets with EPEX Spot wholesale markets. The partners will focus on the United Kingdom and central and western Europe, where EPEX Spot operates, executives said.

Industry Perspectives

Microgrids bring benefits to communities and cities, but economic barriers can stand in the way of their deployment. Mehdi Ganji, smart cities vice president at Willdan Energy Solutions, discusses the use of resilience tariffs to overcome these barriers in an interview with Yasmin Ali, Microgrid Knowledge contributor.

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